Auditor gives Belleville Public School District a clean FY2024 opinion, flags three procedural recommendations

The Belleville Board of Education heard a presentation of the district's fiscal year 2024 audit at its Feb. 24 meeting. The district's auditor delivered an unmodified opinion on the financial statements and on compliance with federal and state grants, meaning the auditor found the statements "fairly stated" and grants were administered in compliance in all material respects.

"Our opinion on the financial statement was unmodified. Unmodified means a clean opinion," the auditor said during the presentation. He told the board the audit found no material weaknesses and no significant deficiencies in internal control.

The auditor reviewed the district's fund balances and reserves, reporting that the district ended the year with total fund balance of about $9.96 million, essentially unchanged from the prior year. Key items the auditor highlighted included:

- Capital reserve: $4,998,698 (an increase of roughly $921,000). The auditor noted those funds were set aside by board resolution and are restricted to capital projects in the long-range facilities plan.

- Maintenance reserve: $1,533,265 (a decrease of about $133,000). The auditor distinguished maintenance reserve funds from capital reserve, noting maintenance funds pay for repairs to keep facilities working rather than adding life-extending capital projects.

- Unemployment compensation reserve: about $166,000. The district uses a self-insured/reimbursement approach rather than the contribution method for unemployment claims, the auditor said.

- Signed fund balance for encumbrances at year end: approximately $417,000 (open purchase orders that will liquidate when goods or services are received).

- Designated fund balance for subsequent expenditures: $500,000; the auditor said that amount was approved by the board to balance the 2024-25 budget and is being used during the 2024-25 year.

- Unassigned fund balance: $2,348,817, an increase of about $690,000 from the prior year; the auditor said this represents the maximum the district is allowed to hold under applicable limits (1.5% of the budget plus an allowable add-back of unbudgeted state aid received during the year).

The auditor identified three recommendations in the auditor's management report. He said one recommendation related to financial planning, accounting and reporting: a payment for unused sick time appeared not to conform to the employee's contract and "it appeared that the employee was overpaid," and the business administrator was pursuing recovery. The auditor recommended a formal procedure requiring supervisor review and sign-off for payments of unused sick days.

A second recommendation addressed capital-lease refinancing: New Jersey law allows financing a capital lease for up to five years, but the auditor found instances of leases being refinanced to terms longer than five years and advised the district to discontinue that practice.

A third recommendation concerned cooperative purchasing: when the district "piggybacks" on another governmental agency's bid, the auditor said the district needs to obtain and keep contract documentation (including the cooperative award and price lists) to verify the cooperative vendor is charging the award price.

The auditor described these items as recommendations rather than findings that rose to the level of material weakness or significant deficiency.

Business Administrator Thomas Paladino and state monitor Thomas Egan were present for the presentation. State monitor Egan praised the audit, saying it was "the best report they've had in 10 years," and said the district is in good financial condition going into the 2024-25 year. Egan also said the monitor's office will request a projection through June to avoid surprises and noted state aid numbers would be announced by the governor and follow-up district detail would arrive later in the week.

Board members did not move any additional formal action on the audit at the meeting; the auditor took questions and the district said it would follow up on the auditor's recommendations.

The audit report and the auditor's management letter are the official records for the findings and recommendations; board members and administrators said they would post or otherwise make contract details and follow-up materials available in district records where required.

The auditor closed by congratulating the administration for the report and offering to answer any follow-up questions.